Ryanair Ends Talks for Follow-On Boeing Max Order Over Price
(Bloomberg) -- Ryanair Holdings Plc ended negotiations with U.S. planemaker Boeing Co. on a major follow-on order for 737 Max aircraft after failing to agree on pricing.
Talks on the higher-capacity Max 10 single-aisle jets ended after 10 months, Ryanair said in a statement Monday. Europe’s largest low-cost carrier has ordered 210 of the smaller Max-8200 already, with deliveries spanning the next five years.
“Both sides have agreed to waste no more time on these negotiations,” Ryanair said.
While the Irish discounter is a long-standing partner whose business is valued, “we continue to be disciplined and make decisions that make sense for our customers and our company,” Chicago-based Boeing said in an emailed statement.
Ryanair Chief Executive Officer Michael O’Leary is famed for driving hard bargains with planemakers, and for sharing the status of talks with the press. In December, he signed an add-on deal for 75 of the Max 8200 model, winning price reductions while injecting the Boeing program with a shot of confidence as it returned from a prolonged grounding. He calls the plane, a customized version of the standard Max 8 that squeezes in more seats, a “gamechanger” that will help Ryanair seize market share coming out of the Covid-19 pandemic.
Last week, O’Leary told reporters that Ryanair was targeting 100-200 planes, but could buy as many as 250 if prices were favorable. At the time he noted tension in the talks with Boeing and said a deal was unlikely this year. An order for 200 Max 10 jets would surpass $25 billion before the significant customer discounts that are typical in the industry.
But after Boeing netted significant commitments this year, including from heavyweight carriers like Southwest Airlines Co. and United Airlines Holdings Inc., the U.S. manufacturer may no longer be willing to offer such low prices.
“Narrowbody orderbooks still remain fairly full so there’s no need for Boeing to agree to some very large discounts,” Bernstein analyst Daniel Roeska said in emailed comments. Ryanair has enough planes to fill its near-term demand so the airline is also unlikely to rush into a deal, he said.
In the Ryanair statement, O’Leary pointed out that other large Boeing customers such as Delta Air Lines Inc. and Jet2 Plc have placed recent orders with Airbus SE. “We do not share Boeing’s optimistic pricing outlook,” he said.
Ryanair shares gained 1% to 16.19 euros in Dublin. U.S. markets are closed on Monday for the Labor Day holiday.
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